What Would Happen to the Equilibrium Price and Quantity of Lattés

question 84

Multiple Choice

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that lattés cause heart attacks?

• A)Both the equilibrium price and quantity would increase.
• B)Both the equilibrium price and quantity would decrease.
• C)The equilibrium price would decrease,and the effect on equilibrium quantity would be ambiguous.
• D)The equilibrium quantity would decrease,and the effect on equilibrium price would be ambiguous.

---

Definitions:

Self-Tender

An offer by a company to purchase its own shares from shareholders, typically as a strategy to increase share value or fend off unwanted takeover attempts.

Takeover

The acquisition of control over a corporation through the purchase of a substantial number of the voting shares of the corporation.

Takeover

The acquisition of one company by another, either through direct purchase or by obtaining a majority stake in the target company.

Assets

Resources owned by an individual or entity that have economic value and can be converted into cash.